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UK think tank calls for public audit independence

The New Local Government Network (NLGN) in the UK has unveiled a series of proposals to protect against the dangers of the “trend towards centralised regulation of public sector audit,” following the abolition of the Audit Commission last year.

In its report, ‘Show me the Money’, the independent think tanks says that while a successor to the Audit Commission is found, a series of important standards must be retained.

The research report advocates auditor independence be maintained and suggests a series of proposals to protect against the dangers of centralised regulation to “ensure cost-effective audit and clear systems of accountability and independence”.

These include:

•Decentralising the responsibility to approve appointment of auditors to local independent audit committees. These should be statutory bodies with a lay chair and a majority of lay members.

•Simplifying financial reporting to make it more accessible and meaningful to local citizens so that ‘armchair auditors’ can hold elected officials to account.

•Providing citizens with a ‘Right of Appeal’ in cases where the independence of auditors may be compromised.

The NLGN’s research also highlights three key foundations for a new audit regime: independence, assurance and accountability to citizens; ensuring a vibrant market for audit services to reduce costs and retain quality; and providing local choice, discretion and democratic accountability.

The report says that if these three often-competing dynamics can be balanced then “the future of audit is likely to be stable, productive and proactive in meeting the needs and demands of central politicians, local government, ambitious audit firms, the cost-reduction agenda and citizens themselves.”

The UK government announced the abolition of the Audit Commission in August 2010.

 

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